It’s a good day for Internet stocks after Priceline Group Inc (NASDAQ:PCLN) announced it will buy OpenTable Inc (NASDAQ:OPEN) for $2.6 billion in cash. Priceline itself slumped by nearly 3% in afternoon trading, but OpenTable skyrocketed, climbing by as much as 47% by the afternoon, tripping a circuit breaker at the NASDAQ and halting shares.

Groupon

Groupon Inc (NASDAQ:GRPN) also climbed today, rising as much as 5% by the afternoon, and Yelp Inc (NASDAQ:YELP) soared by as much as 12%. GrubHub Inc (NYSE:GRUB) shares shot up by as much as 8%.

Did Priceline overpay for OpenTable?

In a report dated June 13, 2014, Stifel analysts George Askew, Steve Rubis and Zim Yin said they don’t think any other company will enter a higher bid for OpenTable Inc (NASDAQ:OPEN). The analysts believe that Priceline Group Inc (NASDAQ:PCLN) overpaid for the online restaurant reservation service.

At a price of $2.6 billion or $103 per share, the Stifel team said OpenTable Inc (NASDAQ:OPEN) is valued at an enterprise value / adjusted EBITDA multiple of 26.9 times their 2014 adjusted EBITDA estimate, which is $88.5 million. They also estimate that it is a multiple of 20.8 times their 2015 adjusted EBITDA estimate of $114.3 million.

Why Priceline will buy OpenTable

A deal between Priceline Group Inc (NASDAQ:PCLN) and OpenTable Inc (NASDAQ:OPEN) is an interesting idea but one that makes sense. Travelers who use Priceline’s services could also use OpenTable’s services, particularly as they search for places to eat while they travel.

Currently OpenTable Inc (NASDAQ:OPEN) has nearly 32,000 restaurants signed up for its network. Priceline Group Inc (NASDAQ:PCLN) is the biggest online travel company in the world, so it can drive substantially more traffic to OpenTable’s site.

Priceline Group Inc (NASDAQ:PCLN) will also be able to leverage OpenTable Inc (NASDAQ:OPEN)’s database of constantly refreshing restaurant reviews. The company has more than 25 million reviews on the restaurants in its network, and the Stifel analysts estimate that the company is generating about half a million new reviews every month, keeping the information fresh.

Looking overseas

The Stifel team believes that the main focus of the deal between the two companies is international expansion. They note that OpenTable Inc (NASDAQ:OPEN) has been struggling internationally for a number of years. The company just recently started to gain a foothold in the U.K. after it acquired TopTable.

However, OpenTable is still struggling to find success in Japan and Germany. The Stifel team thinks that Priceline’s network will give OpenTable’s network a big boost internationally, especially in Europe. The analysts don’t think there’s a “magic bullet” in the markets they mentioned, however.